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Reduced TV Ad Spending Growth Seen

Brian Wieser, an analyst with Pivotal Research, has bad news for the TV business.

In a new report, Wieser has cut his five-year forecast for TV ad revenue growth, while raising the amount he expects Internet advertising to increase over the same period.

TV—national and local—is seen growing at a 1.3% compound annual rate over five years by Wieser, down from his previous 1.8% forecast. Internet ad growth is expected to jump a healthy 11.7%, better than his prior 10.6 prediction.

Wieser thinks the belief that ad dollars are shifting from traditional TV to digital media are “generally overblown.”

On the other hand, a more meaningful factor, he says is the shift of professional video content to digital media. He pointed to Yahoo’s agreement to license an NFL game this season. “We think real TV dollars can more readily flow to TV content” when that TV content is being streamed rather than broadcast, he said.

The other bad news for media owners is that marketers are looking to cut costs. When they push agencies to negotiate hard for lower ad rates, that money is dropping to the bottom line, rather than being plowed back into more media spending as it had in the past. Also money that might have gone into buying media is now being spent on marketing technology software and data.

In his new forecast, Wieser pegs overall ad spending growth at 2.5% for 2015, unchanged from his prior calculation, and five-year growth at 3.1%, up marginally because of slightly higher forecasts for U.S. economic growth.